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Indian Auto Industry Essay

776 words - 4 pages

Indian Market

India’s automotive industry is booming. The industry currently contributes about U.S. $34 billion to the Indian economy, equivalent to five percent of its national GDP. It produces over 11 million vehicles a year making it one of the eleventh largest passenger car producers in the world. Directly and indirectly it employs more than nine million people and if we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher. India is the world’s second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles in the world.
In the initial years after independence Indian automobile ...view middle of the document...

Not only the Indian auto industry enjoys distinct labor advantage but also it has a developed auto component industry which makes it distinct from other .India’s component industry now has the capability to manufacture the entire range of auto-components, for example, engine parts, drive, transmission parts, suspension and braking parts, electricals, body and chassis parts, equipment, etc.
The Indian automotive market is now one of the fastest-growing in the world. The domestic growth continues, fuelled by rising disposable incomes and increasing consumerism. They also believe that global automakers will continue to allocate an increasing proportion of their foreign direct investment into India, initially into manufacturing and then later into auto engineering and R&D. India is a billion-citizen economy where vehicle usage and ownership are still very low by world standards.

But there are good reasons for caution. India’s ramshackle infrastructure is retarding the industry, particularly its power and fuel costs. The auto industry also lags sectors such as IT and financial services in management training, reward and retention.

India’s fragmented component industry needs more consolidation if it is to achieve critical mass. Internationally, Indian automakers and component manufacturers accept that they need more alliances in distribution and marketing. It is...

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